Recently, the TV series "Anjia" is on the air. I don't know if you are paying attention, but the editor is waiting it every day. Although the plot is not very logical, it is just irresistible, and the two episodes aired on Thursday night are even more exciting. The male and female protagonists are finally overwhelmed by the difficulties of the male second. They chose to start their own business and choose to develop a youth apartment with a real estate owner. At this point, in addition to immersing myself in the plot and role, as a professional in financial and taxation, we considered the treatment in accounting and related tax issues behind this episode.

Q:	What is the treatment in accounting while the owner of the apartment is an enterprise and it rent out the property owned for many years?
A:	It is necessary to transfer the property from the fixed assets account to investment property, and after the management level of it decides the relative accounting method (the cost model or the fair value model) for recognition value. Among them, the cost model is same as we deal with the fixed assets, and depreciation is withdrawn on schedule, except that the depreciation withdrawal is no longer included in management expenses or sales expenses, but is included in other business expenses; When with the fair value model, it is relatively complicated. First, it is necessary to compare the fixed asset's book value with the fair value on the conversion date. When the book value is less than the fair value, which means that the property is in an appreciation state, the difference is included in "other comprehensive income", and when the book value is greater than the fair value which means the property is depreciated, the difference will be included in subjects such as "fair value gains and losses"; Secondly, in the subsequent measurement, the book value of the investment real estate should be adjusted at the end of each period according to the fair value of the property, and the difference will be included in the fair value profit and loss account, which ultimately affects the profit and loss (the income statement).
Q:	What is investment property? How is it defined in accounting?
A:	Investment property, including 1) leased land use rights; 2) held and ready to transfer value-added land use rights; 3) leased buildings.
Q:	Leased houses are measured at fair value. Is there different treatment in finance and tax? What should we do?
A:	The tax does not recognize losses or gains that can be accounted for at fair value, but only recognizes the model of depreciation on a regular basis and includes it in profit or loss (that is, the cost model), so when the next year's settlement, the difference between fiscal and taxation should be adjusted before tax.
Q:	How to pay tax for a company renting an apartment?
A:	The rental income of a company renting an apartment should be included in "other business income" (such as the company's non-main rental property business), which ultimately affects profit and loss and involves 25% corporate income tax. At the same time, the rental income is subject to 12% of real estate tax, and value-added tax (10%), surcharges (including urban construction tax, education surcharge, and local education surcharge, will vary according to the city, county, and village to which they belong), and stamp duty (0.1%).
Q:	What conditions should be met for investment property measured using the fair value model?
A:	1) The investment property has an active real estate trading market; 2) The company can obtain market prices and other relevant information of similar or similar property from the active real estate trading market, so as to make a reasonable estimate of the fair value of investment property.
Q:	What taxes are involved when the property owner sells the property?
A:	When selling the property, it mainly involves land value-added tax (accumulated based on the over-rate cumulative tax rate), value-added tax (10%), surcharges and stamp taxes (0.05%).

There are still many financial and tax issues related to housing, such as the handling of asset mergers and acquisitions, such as the company's liquidation, etc. Please stay tuned for the next issue, and KAIZEN will answer them one by one.